Chocolate producer Barry Callebaut recorded important growth on the chocolate segment in the first quarters of the fiscal year 2018/2019, especially after its innovation – ruby chocolate was officially introduced to the United States and Canada.
In the first nine months of fiscal year 2018/19 (ended May 31, 2019), Barry Callebaut grew its overall sales volume by 5% (10.6% in Q3) to 1,589,181 tones. Sales volume in the chocolate business grew by 5.9%, well above the underlying global chocolate confectionery market, which was up 0.9% according to Nielsen.
Global Cocoa volumes increased 2.2%, while sales revenue in the period under review amounted to CHF5.5bn (EUR4.5bn), an increase of 8.2% in local currencies (5.7% in CHF). The increase in sales revenue was impacted by higher raw material prices.
“We are confident we will deliver on our current mid-term guidance. Going forward, we remain committed to achieving consistent above-market volume growth and enhanced profitability. This is why, in January, we renewed our mid-term guidance for the coming three fiscal years,” said Antoine de Saint-Affrique, CEO of the Barry Callebaut Group.
The manufacturer says it has achieved strategic milestones in the first nine months of fiscal year 2018/19:
In March 2019, the company inaugurated a state-of-the-art processing unit at its Société Africaine de Cacao (SACO) plant in Abidjan, Côte d’Ivoire. It includes a fourth grinding line and will increase SACO’s cocoa bean processing capacity by over 40.0% by 2022.
In April 2019, they signed a Memorandum of Understanding with the Government of Serbia to construct the Group’s first chocolate factory in Southeastern Europe. The plant in Novi Sad is expected to have an initial annual production capacity of over 50,000 tones and to be operational by 2021.
In May 2019, Ruby was officially introduced in the United States, the world’s largest chocolate and confectionery market, and Canada, as a part of its global launch plan. This innovation was the highlight of this year’s National Confectioners Association’s (NCA) Sweets and Snacks Expo in Chicago, according to the producer. Ruby chocolate is now available in more than 50 countries worldwide.
Furthermore, Barry Callebaut’s sugar reduced solutions, like the new dark and milk chocolate with only 1% added sugar, continue to cater to the desires of wholesome choice consumers and as a result continued to grow by double-digits, the company says.
- Cost Leadership
In February 2019, Barry Callebaut successfully placed a EUR600m equivalent Schuldscheindarlehen at attractive average rates of 1.65% and an average tenor of 7.8 years. The group will repay its outstanding 5.375% senior note, due 2021, in the amount of EUR250m in the beginning of August 2019. The one-off impact of these transactions on the net financial cost is estimated at CHF33m in the current fiscal year. As from fiscal year 2019/20, net financial cost will improve by approximately CHF10m.
The chocolate specialist has established traceability for a third of its global cocoa volume. Traceability is a key tool for the group to reach its “Forever Chocolate” commitment to make sustainable chocolate the norm by 2025. To achieve this, the company has prioritized the establishment of traceability in its Ghanaian and Ivorian supply chains.
In May 2019, Barry Callebaut and Cameroon signed a letter of intent to intensify the cooperation on sustainable cocoa farming. The signatories will particularly focus on supporting the next generation of cocoa farmers in Cameroon through a program initiated by the Cameroon Cocoa and Coffee Interprofessional Council (CICC).
Growth by Regions
Sales volume in EMEA increased by 5.3% to 732,278 tones, well above the regional chocolate confectionery market, which was basically flat (0.2%). The further acceleration was supported by strong growth in food manufacturers in Western Europe, including the ramp-up for Burton’s Biscuit, and in Eastern Europe, with Inforum contributing to sales volume since February 2019.
Healthy growth momentum continued to build in the Americas with sales volumes up 6.0% to 424,216 tones, supported by both food manufacturers and gourmet & specialties, while the chocolate confectionery market grew by 0.2%5. Gourmet & specialties continued to grow double-digit in South America and good momentum continued in North America. Sales revenue increased by 9.7% in local currencies (11.0% in CHF) and amounted to CHF1.3bn.
Asia-Pacific sales growth momentum further accelerated, resulting in volume growth for the first nine months of 10.1% to 87,543 tones, ahead of the underlying market growth of 8.0%5. Growth was fueled by food manufacturers, mainly through regional accounts. Sales revenue grew 9.3% in local currencies (10.0%) in CHF) to CHF303.6m.
Sales volumes increased by 2.2% to 345,144 tones in the period under review. Sales revenue increased by 12.5% in local currencies (8.8% in CHF) to CHF1.4bn.